IE Focus || Germany 4 – Spain 0

By David Bach, Professor at IE Business School, published on IE Focus

Germany has scored more economic goals than Spain because it applied the structural reforms needed before the crisis took hold, and because Merkel, has controlled spending from the start.Spain may have beaten Germany in both the European Football Championship and the World Cup, but where economy is concerned there is no doubt that Germany has the upper hand. Last Thursday´s news that the largest economy on the continent had grown by 3.6% in 2010 (the highest level since the unification in 1990) has surprised even the experts. The Spanish economy, however, closed 2010 with an average reduction of 0.2%. What does Angela Merkel know about economics that the Spanish president doesn’t? One analysis of the German success shows that the causes behind the differences go beyond the current Chancellor´s policies and also clearly point the path Spain should take.

Germany´s economic strength (and Spain´s weakness) is based fundamentally on four pillars: